The Russian ruble is one of the worst-performing currencies this year, falling about 24% to nearly 92 per US dollar, and the decline could get even worse.
“The ruble doesn’t have anywhere to go but down,” Konstantin Sonin, a University of Chicago economist, said in a tweet Thursday.
The volatility in the ruble surged in recent weeks after the leader of the Wagner mercenary group, Yevgeny Prigozhin, staged a short-lived revolt against the Kremlin.
The uncertainty in Russia has sparked a surge in demand for other currencies, with Bloomberg estimating that $43.5 billion of retail deposits ditched the ruble in favor of other currencies since the war began in February 2022.
Sonin said that while the ruble surged in 2022 because of “weird” macroeconomic effects, including a dramatic fall in imports, those effects were over and the currency faced several headwinds that could push it to record lows.
“What remains is continuing capital flight, decreasing budget revenues, both oil/gas and domestic taxes, declining real incomes, CB reserves lost because of the war,” Sonin said, referring to central-bank reserves.